Do You Know How To Spot Credit Repair Scams?

You may see ads on TV, online, or in the newspaper claiming that your bad credit can be quickly and easily fixed. Don’t fall prey to these scam artists.

Avoid companies that tell you truthful information can be changed or erased to improve your credit or that only the credit-repair company can remove old or inaccurate information. These claims are false.

Be wary if you are asked for a large sum of money before the credit-repair company completes the job. A money-back guarantee will not protect you from a disreputable company.

Avoid new credit identities

If you have filed for bankruptcy, you may be the target of a credit-repair scheme, often called "file segregation." Here, you are promised a chance to hide unfavorable credit information by establishing a new credit identity.

However, there is a problem: File segregation is illegal. If you use it, you could face fines or imprisonment.

Other scams

Consumers looking for an easy fix often are targets of other credit-related scams:

Credit by phone: Pay-per-call or 900-number services have become a popular vehicle for credit scams. Advertisements promise that "guaranteed" credit or cash loans are only a phone call away. Instead, the caller might only receive a list of banks offering low-interest credit cards or a booklet on how to establish credit — and a phone charge of $50 or more. Consumers rarely end up getting credit.

Gold or platinum cards: Beware of promotions for gold or platinum cards that promise to get you credit and build your rating. Although they may sound like all-purpose credit cards, some cards only permit you to buy merchandise from special catalogs and will not help you obtain other credit. You also might be asked to call a 900 or 976 exchange number for more information. These phone charges add up quickly.

Checking-account scam: This scam, which tricks you into disclosing your checking-account number, typically begins with a postcard advertising easy credit approval or low-interest credit card rates. When you call, you are asked for your checking-account number as "verification." Your number then can be magnetically encoded on a draft, which is forwarded to your unsuspecting bank for payment from your account.

If you suspect a credit-repair scam, file a consumer complaint with the Attorney General's Office online or by calling the Consumer Protection Hotline at 1-800-392-8222.

Never give out your bank account or credit-card number unless you know the company is reputable. Don’t be a victim of these credit card repair scams.

Do Credit Repair Yourself – No One Else Can Do It For You

Doing credit repair yourself does not require any special knowledge. You don’t have to be an accountant, nor do you have to pay a credit repair agency to help you. The fact is that no one can repair your credit but you. Others can only give you tips to help you out. If you have bad credit, then you have to do the credit repair yourself by taking the necessary steps.

Do it yourself credit repair tips include getting a copy of your free annual credit report. You are entitled by law to get a free copy of this report once a year. This will give you a list of all your bills and tell you how much you owe. It will also tell you if you have been late with payments or have missed them completely. You will have to do the credit report repair yourself by being more diligent in paying your bills. Doing credit repair yourself also means you should take a good look at the outstanding balances you have on your accounts.

One of the do it yourself credit repair tips that you should consider when you are trying credit repair yourself is to take the bill with the lowest amount owing. Take extra steps to pay this account off in full. Accounts paid in full show up as favourable items and go a long way towards credit report repair. When you take this approach to credit report repair yourself, you will find that if you pay as little as an extra $50 on one bill per month, you will have it paid in full a lot faster.

Once you attempt credit repair yourself, you will find that it gets a lot easier as you go along. The first few months may be difficult, as doing credit report repair yourself requires you to stop spending on frivolous items. Look at something you really want to buy and ask yourself if you really need it. If the answer is no, then don’t buy it. When you start paying more money on bills and get them paid off, you will have extra money left over to pay for the frivolous items. Doing credit repair yourself is something that you have to work at. It will not show up in your credit report next month, but when you get your free annual credit report next year, you will see a big difference.

You can realistically do credit repair yourself, if you know how.

Don’t Despair With Credit Repair

Just because you have a poor credit report doesn’t mean you won’t be able to get credit. Creditors set their own credit-granting standards and not all of them look at your credit history the same way. Some may look only at more recent years to evaluate you for credit, and they may grant credit if your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.

If you’re not disciplined enough to create a workable budget and stick to it, work out a repayment plan with your creditors, or keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But not all are reputable. For example, just because an organization says it’s a "nonprofit," there’s no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, or hide their fees by pressuring consumers to make "voluntary" contributions that only cause more debt.

Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.

If you are considering filing for bankruptcy, you should know about one major change to the bankruptcy laws: As of October 17, 2005, you must get credit counseling from a government-approved organization within six months before you file for bankruptcy relief. You can find a state-by-state list of government-approved organizations at the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees.

Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting.

Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.

Consolidating your debt, paying your bills on time, cutting on the frivolous expenses, and preparing a budget for your discretionary income will help you overcome the mountain of credit card debt.

It may look bleak – even impossible – but if you stick to your plan, you will be able to dig yourself out of this hole.

Do-It-Yourself Credit Repair

Good credit is key to economic success. You may not give to much thought to your credit report, but good credit lets you do a lot of things that most people take for granted: get a credit card, rental a car, obtain a loan, or even get an apartment. Missed payments to a creditor, or defaulting on a loan altogether, creates black marks that are recorded on your credit report when your creditor reports them to a credit bureau. Too many missed payments or defaulted loans will leave you with no option but to start the credit repair process, otherwise, your applications for credit cards or other loans will be turned down consistently until you do.

A quick search in the classified ads or on the internet for credit repair will give you tons of offers from credit repair companies offering a quick fix to your credit problems. Most of these companies have aggressive marketing strategies that promise to fix your credit report fast for a nominal fee. Be very cautious with these companies and deal with them at your own risk –many are not only scams, but also in most cases you can fix your own credit more effectively by doing it yourself.

Remember: there is nothing a credit repair company can do for you that you can't do for yourself. Even though credit repair companies might imply otherwise, they can’t erase poor marks on your credit rating and they have no influence over the credit bureau. Most likely, the credit repair company will probably tell you to obtain a copy your current credit report and to challenge any negative items on it. You can do this yourself without actually paying someone to tell you to do it.

Sometimes, credit repair companies may even recommend that you perform activities that aren’t even legal to "fix" your credit. They might encourage you to begin working on a "new" credit rating by changing your banking information and address. Not only is this procedure illegal, it is usually ineffective. You are better off going through the credit repair process on your own. An online search will yield detailed sites with step-by-step instructions. Again, beware the source. Your best bet is going through a government-affiliate site or one that is put together by a trusted organization.

The best approach to credit repair is to first obtain a copy your credit report from the credit bureau. Examine the report closely, line by line, and make sure to challenge any errors on the report, in writing, to the agency that reported it. Challenge only items that are genuine. If your report is free of errors, you will need to repair your credit in the traditional fashion, usually involving obtaining a secured credit card that you use regularly, making regular payments on the balance. This will slowly improve your credit rating.

Most importantly, be patient and make smart budgeting decisions. Credit repair is not a quick process, and you will find that you are able to pay off your creditors given enough time. By making payments regularly and not defaulting on any loans, your credit score will eventually prove that you are eligible for credit. Although this method of credit repair is not a fast process, it is truly effective. By doing your own credit repair, you will be far more successful than if you were to employ a credit repair company.

DIY Credit Repair Tips

While many people believe that getting their bad credit repaired can only be done through a professional agency, this is simply not true. By going to a credit agency, you might find that it takes a great deal more time and money than if you just worked on it yourself. Before you get in touch with a professional credit repair service, refer to the steps listed below, and you might find that repairing your own credit is not that difficult at all.

When you repair your own credit, you must understand that it is a lengthy process that requires patience. The first thing you need to do is contact credit reporting agencies in writing, and request a copy of your credit report. Federal Law states that everyone gets a free credit report annually. You can locate the three main credit-reporting agencies that you will need to get in touch with by performing an Internet search using the terms "Credit Reporting Agencies". You might also consult your local phone directory.

Contact the agency in writing, and include the following information in your request:

1. Request a free copy of your credit report.
2. A copy of your state identification (such as your driver’s license)
3. Copy of proof of your current address (such as a utilities bill showing your home address)
4. Provide your previous addresses for the past 5 years.
5. A copy of your social security card.
6. Make sure you close the request with your signature.

Your credit report should take approximately 4-6 weeks to be generated and sent to you. If you receive a letter denying you credit, make a copy and enclose it with your written request for a copy of your credit report. If you have already received your free annual credit report permitted the free yearly report, you can use a denial letter of credit within 60 days of its receipt.

When you receive your reports from the agencies you contacted, look over each report for accuracy and discrepancies. Create a log in order to track the differences. If you find invalid accounts or errors in your reports, do not hesitate to file disputes. If you need to file a dispute, most agencies provide the forms to do so via their website. Each credit report should provide contact and account information for each creditor. Keep a log of all your debt information and creditors. Most debts older than 7 years old probably won’t appear on the report, and if so, leave them alone. Most creditors after 7 years will write off the debt, though some might continue to pursue you. Whatever the case, don’t open the Pandora’s box if the account isn’t listed on your credit report.

The next step is to contact each creditor to make payment arrangements. Most of them will be willing to work with you, while some might not be so agreeable. If a creditor is being difficult, feel free to ask for his or her supervisor or speak with someone else. Expect some creditors to be rude and unwilling to work with you. Try no to feel discouraged, be persistent, and ask to speak with someone else. Offer a settlement amount. Keep a written log of the conversation, including the person’s contact information each time you speak with a creditor.

It can take as many as 6 months to feel like you are making headway on your credit repair, but rest assured that your credit will get better within a year or two.

It is very important that while you are paying off your debts that you pay by check or money order and retain all receipts. Make sure that you request a receipt for the payment from the agency.

Continue to obtain copies of your credit reports annually from each agency. Do not create new debts while paying off your current ones. If you receive credit offers, throw them away. Remain focused on your goal to get out of debt and document your payments, contact with the creditors, their names, extension, time and date you spoke with them and list any pertinent detail regarding your conversations.

Credit Repair: Good Credit References

Unfortunately, there is no magic repair available today. You will need to dedicate a good deal of discipline, patience and effort to the task.

It will be a better idea to start with requesting copies of credit report from each of credit reference agencies. It is well known that Credit reference agencies do not make credit decisions. They only collect and give credit history and identifying information to potential lenders. If needed this information is also provided to potential credit employers.

The three credit reference agencies are Experian, Equifax and TransUnion. Most provinces provide at least one free credit report per year. You can often get your report by making a request through the automated telephone service, by regular mail and by email (in my view, a telephone request is the most easiest to get a credit report). When you get report, you must review it carefully for outdated information and errors. If you feel any problem with your credit report, you must report about it to credit companies in written. Include all supportive documentation you require to substantiate your claim.

If you are like a modern American you should have at least one negative credit reference on your report. These negative credit reference include such credit remarks as:

·Defaults (The lender has doubts that you will repay his owed funds.)
·Late Payments (It is better to pay early.)
·Liens or Judgments (Legal process by a lender to recover payment.)
·Repossessions.
·Bankruptcies.
·Excessive Credit Inquires.

As lenders don't know you personally, they just believe on a system that allows them to make a better credit decisions. If you have been denied credit, it is not a personal matter it is just a business decision. After all, would you lend money to someone who has a history of paying it back late or absolutely not paying it back? Your answer will be no, you will not like to give money to person having negative credit references. Make a plan to develop some good credit references. As you will pay off your credits, your credit report will improve that will change lenders attitude for you.

Let's start with the basics:

·Pay your bills early.
·Stabilize.
·Maintain accounts.
·Keep your head out of the sand.
·Consider online banking.

Each of these steps will help you to build good credit references with time.